Finance (No.2) Bill

Written evidence submitted by a person who wishes to remain anonymous (FB25)

Topic: Finance No.2 Bill submission, namely the 2019 Loan Charge

Dear Sir or Madam:

Exec Summary

· Financially ruined by the 2019 Loan Charge

· HMRC valuations of tax completely unrealistic, including paying for Student Loans which have been paid in full

· Rangers ruling has determined that the Employer is liable

· HMRC insist that the loan is a wage for the 2019 charge, but then insist that it is not a wage, but in fact a loan for IHT – inconsistency is rife, several methods of taxation is certain, and the terms to closure is not clear

I write in a personal capacity for the abovementioned Bill. I am a mid-30s IT consultant who is affected by the "2019 loan charge". I took up contracting to pay off credit card debts from a relationship where my partner racked up debts back in 2010.

This [entry into contracting] was via an Umbrella company which promised protection from IR35 and reduced administration. The take-home was not significantly more than running a limited company, so seemed a reasonable option. The setup looked legitimate and had registrations in Companies House with no issues, and recommendations from other clients in different sectors

HMRC followed up by confirming no issues with my tax returns. The only time was in my 2013 tax return, when the compliance team determined that I underpaid – which I resolved right away. This was in early 2015. Ironically under this bill, I’m being asked to pay again, despite clear correspondence saying this was resolved and closed. How is this reasonable?

It only came into light to me that EBTs were not viewed as acceptable later in 2015, where Discovery Assessments were sent, demanding significant amounts of money (which I do not have) for immediate payment. I appealed, but letters from Debt Management came through, only to be cancelled. No one is a fan of threats, but the letters were not explanatory as to what the issue was. It only came to light when I reviewed online amongst common forums around the issues.

What makes the situation really frustrating is that:

1. For each "Discovery Assessment", I’m being asked to pay £8k a year in student loans, which has been paid off in full (several years ago). Given that I was in an Umbrella for 6 years, it makes no sense for me to pay £50k for student loans, when HMRC have been notified

2. Despite assurances from the Rt. Hon Mel Stride that resolution is possible, any discussions with HMRC have been ignored (including the £50k supposed student loan re-payment), so I have nowhere to turn

3. Certificates of Tax Deposits (CTD) have also been withdrawn, which means that the focus is on HMRC purely accruing tax via interest

4. There is no clear resolution path – according to the Supreme Court, similar methods of payment were deemed to be income. HMRC have told me that this is income in correspondence, but also state that IHT is also potentially on the cards, as well as PAYE (which the employer is liable for)

5. The Umbrella companies are threatening methods of re-charging, but are exempt from the bill. How is this fair?

Tax is a complicated subject as it is, but the endless ambiguity is not giving me confidence that I will be able to put this to rest, whether it be to pay over a longer period for what I have left, or to end up being bankrupted (as my bill is supposedly six figures, not including the £50k for the Student Loan I have already paid off).

It also looks like the same operators for these schemes are exempt from the charge.

I am out of these Umbrella companies and operating my own company, but this charge will leave me no choice but to end up being homeless. With a chronic illness, I will unfortunately end up being a burden of the state, instead of flourishing and contributing more to the economy.

Any considerations to close off this topic and provide clear guidance would be appreciated. Simply being bullied by different departments from HMRC for different costs gives me zero assurances that enough consideration has been taken into the bill. Going back 20 years (which is retrospective) is completely unreasonable – if this was more publically addressed in 2010, I would have steered well clear. Not everyone is infallible.

I have zero comfort in publishing my name as I don’t feel safe with the endless interrogation from HMRC I am currently having.


January 2018


Prepared 11th January 2018